Lemonade Is Selling 3 Million New Shares — Should Investors Be Worried?

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Insurance technology company Lemonade (NYSE: LMND) has been on fire lately, with shares up by nearly 300% since the beginning of November. However, recent news of a new stock offering has some investors concerned.

On Monday, Lemonade announced plans to offer 3 million new shares of common stock in an underwritten public offering. Other existing stockholders are also selling about 1.5 million shares in the offering. The proceeds from the new shares will be used for general corporate purposes, according to the company’s press release.

Shares of Lemonade had a rather volatile session on Tuesday in response to the news. After plunging as much as 9% in the pre-market hours, Lemonade actually turned positive for a bit but was down by about 4.5% at 3:30 p.m. EST.

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